Heavy Engineering Construction Slumps in March

05/28/2013 by Bernard M. Markstein

Heavy engineering (non-building) construction spending plummeted 3.7% on a seasonally adjusted (SA) basis in March following a gain of 1.0% in February. Year-to-date not seasonally adjusted (NSA) total heavy engineering construction spending was unchanged from the same period in 2012.

Only communication construction spending was up for the month (+4.5%), partially rebounding from February’s 8.9% nose dive. However, year-to-date communication spending was down 6.5% from the same period a year ago. Transportation and power construction spending were the only two categories that were up on a year-to-date basis — 14.8% and 2.5%, respectively.

U.S. Heavy Engineering (Non-Building) Construction
(billions of U.S. current dollars)

  Monthly Figures (1)
(latest actual values)
3-Month Moving Average Year-to-Date (NSA)
  Jan-13 Feb-13 Mar-13 Jan-13 Feb-13 Mar-13 Jan-12 to
Mar-12
Jan-13 to
Mar-13
Transportation 39.1 39.7 39.0 39.1 39.2 39.3 7.2 8.2
  Month-over-Month
  % Change
0.4% 1.6% -1.7% -2.0% 0.4% 0.1%    
  Year-over-year
  % Change (NSA)
12.1% 16.0% 16.4% 12.0% 11.7% 14.8% -5.3% 14.8%
Communication 17.1 15.6 16.3 17.1 16.6 16.3 3.8 3.5
  0.8% -8.9% 4.5% 1.0% -3.0% -1.4%    
  2.8% -12.1% -9.2% -1.0% -6.2% -6.5% -1.2% -6.5%
Power 99.0 101.0 98.2 109.0 105.5 99.4 22.3 22.8
  -14.9% 2.0% -2.7% 2.5% -3.3% -5.7%    
  0.0% 5.3% 2.4% 31.4% 18.3% 2.5% 46.8% 2.5%
Highway 76.7 77.9 73.9 77.5 77.4 76.2 11.8 11.4
  -1.2% 1.6% -5.1% -0.4% -0.2% -1.6%    
  2.1% -2.5% -8.4% -4.7% -2.7% -3.2% -1.1% -3.2%
Water and Sewer 33.8 34.3 31.3 34.8 34.3 33.1 8.1 7.2
  -2.8% 1.6% -8.8% -0.8% -1.5% -3.3%    
  -10.0% -8.1% -15.3% -5.9% -8.0% -11.2% -0.9% -11.2%
Conservation & Development 6.0 6.0 5.7 6.0 6.0 5.9 1.4 1.3
  0.2% 0.7% -5.4% -1.8% -0.4% -1.5%    
  2.3% -2.4% -13.6% -5.8% -3.6% -5.0% -22.2% -5.0%
Total (2) 271.6 274.5 264.4 283.5 278.9 270.2 54.6 54.6
  -6.5% 1.0% -3.7% 0.5% -1.6% -3.1%    
  0.8% 1.6% -2.2% 10.8% 6.5% 0.0% 12.5% 0.0%

(1) Monthly figures are seasonally adjusted at annual rates (SAAR figures).
(2) Total may not equal the sum of its components due to rounding.
Source: Census Bureau, U.S. Department of Commerce. Calculations: Reed Construction Data

Access to public funds for new heavy engineering construction projects will be severely restricted for the next few years. Public-private partnerships are the major means that many states and localities are using to obtain funding for new projects. However, the private sector is still finding it profitable to invest in various heavy construction projects in areas such as power and communication. The Reed forecast for heavy engineering construction spending is for a small increase of 1.0% this year, which is less than the increase in input costs, and for an increase of 6.5% in 2014.

U.S. Heavy Engineering (Non-Building) Construction
(billions of U.S. current dollars)

  Actual Forecast
  2009 2010 2011 2012 2013 2014
Transportation 36.7 38.3 34.9 37.3 39.5 42.0
   Year-over-year % Change 3.5% 4.5% -9.1% 7.1% 5.7% 6.5%
Communication 19.8 17.7 17.5 17.1 16.9 18.1
-25.4% -10.2% -1.1% -2.5% -1.0% 6.9%
Power 88.9 77.9 74.0 97.9 103.0 111.9
  9.6% -12.3% -5.1% 32.3% 5.2% 8.6%
Highway 82.2 82.5 78.9 79.5 77.3 80.8
1.0% 0.4% -4.4% 0.7% -2.8% 4.6%
Water and Sewer 40.3 41.3 36.8 35.4 33.6 35.2
  -5.1% 2.5% -11.0% -3.8% -4.9% 4.6%
Conservation & Development 5.8 7.2 7.4 6.2 5.9 6.1
9.9% 24.7% 2.8% -16.5% -4.0% 3.8%
Total (1) 273.5 265.0 249.4 273.3 276.2 294.1
0.5% -3.1% -5.9% 9.6% 1.0% 6.5%

(1) Total may not equal the sum of its components due to rounding.
Source: Census Bureau, U.S. Department of Commerce. Forecast: Reed Construction Data.

Read more forecasts from Reed Construction Data:

Construction Spending Ends the First Quarter on a Sour Note
Nonresidential Building Construction Spending Sinks in March
New Residential Construction Spending Grows at a Slower Pace in March